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Shapley Decomposition by Components of a Welfare Aggregate

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  • Azevedo, Joao Pedro
  • Sanfelice, Viviane
  • Nguyen, Minh C.

Abstract

We present an exercise to account for changes in an indicator into components of a welfare aggregate. The decomposition presented in this paper focus on the distribution of the welfare variable rather than a decomposable indicator. Thus, it is a statistical exercise in which we assume that we can in fact modify one factor at a time and keep everything else constant. This paper contributes to the existing literature by applying the concept of a Shapley decomposition to deal with the path dependence that arises from changing one element at a time. Although, the interpretation changes, the proposed decomposition is applicable to both the case of panel data as well as repeated cross section and allows accounting the contribution of each component to change in any given indicator.

Suggested Citation

  • Azevedo, Joao Pedro & Sanfelice, Viviane & Nguyen, Minh C., 2012. "Shapley Decomposition by Components of a Welfare Aggregate," MPRA Paper 85584, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:85584
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    5. Kseniya Abanokova & Hai-Anh H. Dang, 2023. "Poverty in Russia: a bird’s-eye view of trends and dynamics in the past quarter of a century," Chapters, in: Jacques Silber (ed.), Research Handbook on Measuring Poverty and Deprivation, chapter 58, pages 627-635, Edward Elgar Publishing.
    6. David Rothwell & Annie McEwen, 2018. "Child Poverty and Family Structure during the Recession in English-Speaking Liberal Welfare States," LIS Working papers 665, LIS Cross-National Data Center in Luxembourg.
    7. Mr. Antonio David & Mr. Martin Petri, 2013. "Inclusive Growth and the Incidence of Fiscal Policy in Mauritius: Much Progress, But More Could be Done," IMF Working Papers 2013/116, International Monetary Fund.
    8. Mager, Gregor & Faße, Anja, 2021. "The Contribution of Smallholders´ Livelihood Activities on Income Inequality and Poverty: Case Study from Rural Tanzania," 2021 Conference, August 17-31, 2021, Virtual 315405, International Association of Agricultural Economists.
    9. Azevedo, Joao Pedro & Inchauste, Gabriela & Olivieri, Sergio & Saavedra, Jaime & Winkler, Hernan, 2013. "Is labor income responsible for poverty reduction ? a decomposition approach," Policy Research Working Paper Series 6414, The World Bank.
    10. Yingfeng Fang & Fen Zhang, 2021. "The Future Path To China’s Poverty Reduction—Dynamic Decomposition Analysis With The Evolution Of China’s Poverty Reduction Policies," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 158(2), pages 507-538, December.
    11. World Bank Group, 2015. "Poverty and Shared Prosperity in Brazil's Metropolitan Regions," World Bank Publications - Reports 22316, The World Bank Group.
    12. Alessandra Brito & Miguel Foguel & Celia Kerstenetzky, 2017. "The contribution of minimum wage valorization policy to the decline in household income inequality in Brazil: A decomposition approach," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 40(4), pages 540-575, October.
    13. Zaman, Qamar uz & Zhao, Yuhuan & Zaman, Shah & Alenezi, Marim & Jehan, Noor, 2023. "Spatial evaluation of multidimensional energy poverty between farming and non-farming communities of agro-climatic zones of Pakistan," Energy Policy, Elsevier, vol. 172(C).
    14. Azevedo, Joao Pedro & Atamanov, Aziz, 2014. "Pathways to the middle class in Turkey : how have reducing poverty and boosting shared prosperity helped?," Policy Research Working Paper Series 6834, The World Bank.
    15. Balcazar Salazar,Carlos Felipe & Desai,Sonal & Murgai,Rinku & Narayan,Ambar, 2016. "Why did poverty decline in India ? a nonparametric decomposition exercise," Policy Research Working Paper Series 7602, The World Bank.
    16. Robles, Adrian & Robles, Marcos, 2016. "Changes in Welfare with a Heterogeneous Workforce: The Case of Peru," IDB Publications (Working Papers) 7507, Inter-American Development Bank.
    17. Piotr Paradowski & Joanna Wolszczak-Derlacz & Eva Sierminska, 2020. "Inequality, Poverty and Child Benefits: Evidence from a Natural Experiment," LIS Working papers 799, LIS Cross-National Data Center in Luxembourg.
    18. Azevedo, Joao Pedro & Inchauste, Gabriela & Sanfelice, Viviane, 2013. "Decomposing the recent inequality decline in Latin America," Policy Research Working Paper Series 6715, The World Bank.
    19. Pérez Pérez,Jorge Eduardo & Rodriguez Castelan,Carlos & Trujillo,Jose Daniel & Valderrama,Daniel, 2015. "Unpacking the MPI : a decomposition approach of changes in multidimensional poverty headcounts," Policy Research Working Paper Series 7514, The World Bank.
    20. Chuliang Luo, 2022. "Decomposition Analysis of Poverty Reduction in Rural China: 2007–2018," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(2), pages 142-166, March.
    21. Orozco, Jorge & Vargas, Andrés & Perilla , Juan & Gómez, Carla, 2023. "Contribución de la informalidad a la reducción de la pobreza: un ejercicio de descomposición para las ciudades colombianas," Documentos Departamento de Economía 55, Universidad del Norte.
    22. World Bank Group, 2015. "Kyrgyz Republic," World Bank Publications - Reports 22957, The World Bank Group.

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    More about this item

    Keywords

    Microdecompositions; Shapley value; Poverty; Inequality;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D6 - Microeconomics - - Welfare Economics
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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